What Are The Regulations Around Security Deposits?

Ontario does not allow security deposits. Landlords can only collect a rent deposit equal to one month’s rent, which is applied to the last month of the tenancy.

Unlike other provinces or countries, Ontario landlords cannot collect “damage deposits”. The Residential Tenancies Act (RTA) only permits a rent deposit, often referred to as a last month’s rent deposit.

• Amount: The deposit must be equal to one month’s rent and is due at the start of the tenancy.
• Usage: It can only be applied to the last month’s rent—not damages, unpaid utilities, or cleaning.
• Interest: Landlords must pay interest on the deposit annually at a rate set by the province, typically the same as the annual rent increase guideline. This can be paid directly to the tenant or applied as a rent credit.

To stay compliant, landlords should:

• Keep clear records of the deposits received and interest paid.
• Include deposit and interest details in the lease agreement.
• Communicate openly with tenants so expectations are clear.
• Failure to handle deposits correctly may result in disputes, orders from the Landlord and Tenant Board (LTB), or financial penalties.

The Fox Marin Team advises landlords on rent deposit compliance, ensuring adherence to Ontario’s RTA, promoting transparency, and helping maintain strong tenant relationships.

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